Vitalik finally admits to a major strategic mistake by Ethereum. Are you still holding your position?

Author: Gu Yu, ChainCatcher

After ETH’s price hit a new low since last May, Ethereum founder Vitalik Buterin today published a long-form reflection, reassessing Ethereum’s Layer2 strategy that has long been at the core of the ecosystem. He plans to increase investment toward Layer1, a move expected to create a sensational impact across the entire crypto industry.

The early roadmap centered on Rollups defined Layer2 as sharding supported by Ethereum, providing trustless block space. In this article, Vitalik appears to have abandoned the “Rollup-centric” scaling model he previously advocated. He points out that, while Ethereum’s base-layer scaling is progressing, the decentralization speed of Layer2 is “far slower than expected,” and many Layer2s cannot or are unwilling to meet the trust guarantees required for true sharding.

“These two facts, regardless of the reasons, mean that Layer2’s original vision and its role within Ethereum no longer make sense—we need a new path,” Vitalik said. From the outside, these remarks are taken to mean that Vitalik is effectively acknowledging that the Layer2 narrative is becoming nearly outdated, and that more future focus will shift to scaling Layer1 itself.

Since the idea of Layer2 was proposed, it has become one of the most capital-hyped and market-watched concepts in crypto. Nearly a hundred Layer2s such as Polygon, Arbitrum, and Optimism have been launched, with cumulative funding exceeding $3 billion. They have played a key role in scaling Ethereum and lowering users’ transaction costs, and multiple tokens’ FDV has remained above $10 billion for the long term.

However, under the strong competition from Solana’s high-performance blockchain, Layer2’s performance advantage has not been fully realized, and the industry influence of its ecosystem projects has gradually declined. At present, only the Base ecosystem remains actively on the crypto front line, representing Ethereum Layer2 as the banner bearer.

Mainly published Layer2 token market cap and funding data Source: RootData

In addition, Layer2 outages have continued to occur frequently. On January 11 this year, Starknet suffered another downtime after being live for many years. Post-incident reports showed that a conflict between the execution-layer and proof-layer states caused about 18 minutes of on-chain activity to rollback. In September last year, Linea was down for more than half an hour. In December 2024, Taiko’s mainnet went down for 30 minutes due to an ABI issue. This suggests that technically, they are still unstable.

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization. It proceeds in stages: Phase 0 (a centralized trust committee can veto transactions), Phase 1 (smart contracts start to have limited governance authority), and Phase 2 (completely trustless).

Although nearly a hundred Ethereum Layer2 projects have emerged, only a very small number have advanced to Phase 1. Coinbase’s Layer2 project Base, which began incubating in 2023, only reached Phase 1 until last year. Vitalik has criticized this multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only one has reached Phase 2—zk.money, the product developed by the decentralized privacy protocol Aztec. However, development for that product has already stalled. The other 12 projects are all in Phase 0, heavily dependent on auxiliary functionality and multisignatures.

Vitalik points out that Layer2 projects should at least upgrade to Phase 1; otherwise, these networks should be regarded as more competitive, “vampire-like” Layer1 networks with cross-chain bridges.

Source: L2beat

Besides potentially slowing the decentralization process of Layer2 due to corporate interests, Vitalik also highlights concerns about technical challenges and regulation. “I’ve even seen at least one company explicitly state that they might never want to go beyond Phase 1. This is not only due to technical reasons related to ZK-EVM security, but also because their customers’ regulatory requirements demand that they have ultimate control,” he said.

However, Vitalik has not completely abandoned the concept of Layer2. Instead, he further broadened his view of what Layer2 should aim to achieve.

“We should stop viewing Layer2 as Ethereum’s ‘brand sharding,’ along with the social status and responsibilities that come with it,” he said. “Instead, we can view Layer2 as a full spectrum: it includes chains that are backed by Ethereum with full trust and credit support and have various unique attributes (for example, not just EVM), as well as various options with different degrees of connectivity to Ethereum—everyone (or bots) can choose whether to focus on these options based on their needs.”

For future development directions, Vitalik also recommends that Layer2 projects, in competition, focus on added value rather than simply scaling up. Suggested directions include: privacy-focused virtual machines, ultra-low-latency serialization, non-financial applications (such as social or AI applications), application-specific execution environments, and pushing beyond the extreme throughput limits that the next generation of Layer1 can support.

It is also worth noting that Vitalik again mentioned ZK-EVM proofs, which can be used to scale Layer1. This is a pre-compilation layer that is written into the base layer and “automatically upgrades along with Ethereum.”

And during the Ethereum Foundation’s organizational structure adjustments over the past year, as well as two network upgrades, Layer1 has already become one of the most core strategic focuses. One of the goals is to gradually increase the gas limit through multiple iterations, enabling L1 to handle more native transactions, asset issuance, governance, and DeFi settlement—without overly relying on Layer2. In this year’s Glamsterdam upgrade plan, multiple technical improvements are intended to reduce manipulation and abuse related to MEV, stabilize gas fee rates, and lay an important foundation for future scaling improvements.

In an earlier statement, Vitalik said that 2026 will be a key year for Ethereum to regain ground in self-sovereignty and decentralization (de-trust). The plan includes simplifying node operations using ZK-EVM and BAL technologies, launching Helios verification RPC data, using ORAM and PIR technologies to protect users’ privacy, developing social recovery wallets and time-lock features to strengthen fund security, and improving on-chain UI and IPFS applications.

Vitalik emphasized that Ethereum will correct the compromises made over the past decade in node operation, application decentralization, and data privacy, and refocus on core values. Although this will be a long process, it will make the Ethereum ecosystem stronger.

Appendix: On Vitalik’s article and viewpoints, many industry figures have also shared their opinions. Below are some highlights excerpted by ChainCatcher:

Wei Dai (1kx Research Partner):

I’m glad to see Vitalik discuss the hindsight mistakes of the Rollup-centric roadmap. But asking “if I were in the L2 layer today, what would I do?” misses the point.

The key isn’t what Vitalik would do, but what these L2 layer and application teams would do. L2 layer and their applications will always put their own interests first, rather than putting Ethereum’s interests first. For L2 layers to reach Phase 1 or achieve maximum interoperability with Ethereum, it must be valuable to do so.

For a long time, this issue has been defined as a security problem (L2 needs L1 to support functionality and CR). But in reality, the most important question is whether Ethereum’s L1 can provide more users and liquidity to L2 layers and applications. (I don’t think there is a simple solution, but the direction of interoperability efforts is correct.)

Blue Fox (well-known crypto researcher):

What Vitalik means is that L2 leverages L1, but in terms of value feedback or ecosystem feedback, L2 hasn’t delivered properly. Now that L1 can expand on its own, there’s no need to rely on L2 to achieve scalability. Layer2 must either stay aligned with L1 (native rollup) or become L1 itself.

What does that imply? It’s bad news for general-purpose L2s, but good news for L2 application chains—just as we’ve consistently been saying. L2 application chains can do creative things and feed value back into the ecosystem.

Jason Chen (well-known crypto researcher):

As Ethereum itself scales, the most noticeable change is that gas fees are now nearly identical to those of L2s, and with gas fees continuing to drop—and once ZK is gradually rolled out, performance will be nearly the same as that of L2s—L2s are in a very awkward position right now. Vitalik’s tweet is essentially a formal declaration that the staged historical task of scaling Ethereum via L2—from then to now—is already complete. If L2s still can’t find new narrative angles, they will become relics of a past era and be phased out.

For project teams, the biggest purpose of doing L2 is still to earn transaction fees for themselves. But for users, L2 no longer has much meaning, because gas and performance can’t really be separated from the mainnet anymore.

Layer2 is born on Ethereum and dies on Ethereum. The disputes between the Zhou emperor and the princes are also over.

Haotian (well-known crypto researcher):

In previous articles, I’ve mentioned more than 10 times that the general-purpose Layer2 strategy doesn’t work. Each Layer2 should instead pivot to a specialized Layer2, which is essentially a form of Layer1. I didn’t expect that after Vitalik Buterin guided a long Stage2 strategic alignment, many Layer2s would still end up as “abandoned children.”

General-purpose Layer2s carry a heavy development burden. At the beginning, they face the technical roadmap issue of aligning with Ethereum’s security; then they encounter regulatory problems caused by a centralized sequencer after token issuance; and finally they suffer the “refutation” burden from insufficient ecosystem incubation. The root cause is that all Layer2s initially relied on Ethereum Layer1 to survive. When Ethereum realizes it is hard to protect itself and starts leading the evolution of Layer1 performance, Layer2 has no enabling imagination left for Ethereum—only burdens and hassles remain.